New | Gloomy mood in iron ore not lifting anytime soon
Price recovery in iron ore may take until 2017
Iron ore prices which have been battered by rising low-cost supplies from Australia will likely see more pressure next year given stagnant demand and additions to an already bloated supply, analysts say.
“Iron prices are likely to fall further since the supply surplus is set to worsen more while demand has been falling,” Li Xinchuang, president of China Metallurgical Industry Planning and Research Institute told the annual China Mining conference in Tianjin.
Lily Shao Yuhan, the iron ore consultant of energy and resource industries consultancy Wood Mackenzie projected prices to bottom out around 2017 before recovering to levels similar to current prices by 2020.
Paul Butterworth, the research manager of steel and raw materials in commodities consultancy CRU, is a bit more optimistic.
“Prices will likely rise from 2017 onwards, as displacement [of high-cost supply] requirements diminish, [production] costs rise again amid recovering oil prices, and the market slowly moves back towards a balance,” he said.
Average iron ore prices at mainland ports fell 43 per cent year-on-year in the year’s first eight months to US$63 a tonne, and hit a trough of US$45 a tonne early July, according to China Iron and Steel Association (CISA) data. Iron ore is the key ingredient in making steel products.
